Trimtabs Investing: Using Liquidity Theory to Beat the Stock Market

The author claims to have altruistic motives and does present some new ideas, which likely work. Unfortunately, it is difficult to collect all the data by oneself. The subscription service is expensive. If Mr.Biderman is truly altruistic, he will keep his subscription cost low.

Charles Biderman thinks about the stock market differently. In his book, he uses liquidity analysis to very effectively predict the short term direction of market. He does it in a clear, simple and concise way. Is it a silver bullet? Of course not. There is no silver bullet! However, I have been an independent sales contractor selling TrimTabs Investment Research for nearly ten years and I can tell you that 29 of the largest over $1-5 billion hedge funds buy TrimTabs research. Why? Because it is original and unique research. I have come across no other similar research in all my years selling it. The book is worth reading for this reason alone. Michael Alexander

This book is really different for the world of finance because it is frank and down-to-earth without making a lot of grandiose claims. As an individual investor, I am not interested in tracking company earnings but want to time my buy, move and rebalance decisions. I could relate to the character in the first chapter. I was not as interested in the looking back section as much as the liquidity in action and the looking ahead sections. So, it's about reading the chapters that pertain to your investment goals. There, I confess to skipping the more aggressive strategies but the point is that Biderman makes these strategies available. The view of supply and demand in the market is intriguing. This liquidity view seems to be an important piece of the puzzle. The author's voice is loud and clear. I like his candor. I think it's irrelevant what his company charges for research because this book gives me a rare inside look at how professional money managers might operate. Biderman sounds like someone I'd like to sit down with for a consultation.

If you are tired of conventional investing wisdom and curious of how the largest hedge funds have done so well - TrimTabs Investing is a must read. The book is a great resource for investors who seek to make money in all market conditions. While most investors are wrapped up in second guessing earnings estimates, Charles Biderman has focused on the supply and demand of equity stock outstanding. Turns out, company insiders have been doing this all along and they know more about how they are doing than we do. Using basic Liquidity Theory, which bases market timing recommendations on a fact-based approach that monitors the signal value of changes in the supply and demand of equity stock outstanding, Mr. Biderman provides a simple, transparent, and repeatable process for actively managing market exposure. With a strong foundation in liquidity theory, you will have more confidence in going against the grain, shorting the market when it is over-backed and going long when equities are undervalued. I highly recommend the book.

This book presents a series of indicators that track the supply of stocks from corporations and the demand of stocks by the public and investment firms. The author has devised these indicators over a long time but only recently (compared to other indicators) has put them together in a working system. His company provides updates to all of these indicators but the author also tells you how to prepare a number of them yourself. It appears that the getting the data is somewhat difficult and messy. It thus borders more on art than science, as some data series come out late (but they are lagging indicators) and some data is just irregular or estimated. The author's testing show great results over the exuberant 2000 decline, but I believe the time period of live testing has been too short and the messiness of the indicators themselves augur for more testing. Please note that it is doubtful that the average investor can accumulate the data to replicate what the authors have proposed. However, there are spin-off indicator ideas that could be applied by the interested market-timer. Also note that there are many researchers who say that market timing is impossible, and that any research pointing to success just used a small period of time where it worked. They also say that market timers who say their systems have worked over the last 70 years have either fit their data going backward, or are just a statistical anomaly. However, most market timers say that market timing can increase your odds of success in the market many times (like double or triple your returns if you can avoid the worst 10% or 20% of the market). To apply the research of these authors, you have to believe that market timing actually works, or that you can shave the odds to your favor. I like this book because it clearly lays out a new indicator methodology along with a rationale. It's up to the reader then to prove that the system works or that he can derive new, easier or better indicators on his own. John Dunbar Sugar Land, TX